As part of the trip to Belize I was able to catch up with a long time close friend who is currently a senior executive at one of the top 4 wireless carriers in the UK. His industry is undergoing enormous change with 1) irrational new entrants such as 3 (owned by Hutchinson Whampoa) offering value destroying low tariffs and heavily subsidised handsets to lure customers 2) a financial hangover from the 22 billion pounds spent on 3G licenses (with more licenses to be offered soon) and 3) market saturation with 82% penetration.
As my friend described how he is trying to change his company's behaviour to stop participating in the industry's 4 billion pound game of musical chairs (13 million subscribers swap carrier each year and it costs 300 pounds to "acquire" them) I had two sobering thoughts. First, every single one of our portfolio companies selling into the wireless carrier market would want an audience with this executive. Second, such a meeting would have zero impact on both the carrier's business and the portfolio's business because their relative perception of success is 3 orders of magnitude apart (billions versus millions).
The conversation was a reminder of the need for context. All too often portfolio companies want an introduction to a senior executive at a target company in the belief that executive will accelerate the sales cycle without taking the time to understand whether they can "move the dial" for that executive. A more effective strategy is to find the manager with budget authority to whom your product matters. If that person does not exist - someone has a problem but no budget or vice versa - then the top down approach will have been wasted anyway. Now finding that person is difficult in a wireless carrier as they transform their organization and lines of responsibility from selling minutes to selling services and applications. But it is precisely because the carriers are going through organizational flux that you need to find this person. Senior executives at the top of organizations in flux don't care about "mere" $10M decisions!
Context - ignore it at your peril.
Comments